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TMI Blog2017 (4) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... e competence of State and is otherwise not questioned. No provision could be shown in the West Bengal Act or the Delhi Act, similar to the one contained in the second proviso to Section 3(1) of the Act of 1979. It clearly holds the proprietor of multi system operator liable to pay entertainment tax, as has already been discussed above. As such, the challenge laid to the impugned orders on the ground that the petitioner is not liable to pay tax, in the facts of the present case, fails. So far as the second aspect of dispute raised i.e. role of subscription received by the petitioner, find that the petitioner has clearly disputed it before the assessing authority and also in appeal. Petitioner's consistent case was that it had received subscription at the rate of ₹ 100 and not ₹ 150 as claimed by the department. The appellate authority has noticed this contention, but has not dealt with it. Learned Standing Counsel has not able to show any consideration on this aspect of the matter in the appellate order. In such circumstances, on this limited aspect the matter is liable to be remitted back to the appellate authority for a fresh consideration of cause. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that petitioner till August, 2013 had installed 49012 Set Top Box (hereinafter referred to as 'STB'), whereas entertainment tax deposited by it till month of October, 2014 was only in respect of 20990 STB. It was also found in a survey that as against disclosed subscription charge of ₹ 100/- per subscriber, the petitioner had collected ₹ 150/- per subscriber. On such basis, for the period between July, 2013 to October, 2014, a total amount of entertainment tax payable at the rate of ₹ 37.50 (25% of subscription charge) was computed at ₹ 2,94,07,200/-, and after adjusting the amount already paid, a show cause notice dated 15.11.2014 was issued as to why an amount of ₹ 2,07,27,205/- be not recovered from the petitioner. Petitioner submitted its reply on 20th November, 2014. Time sought to submit a supplementary reply, however, was not availed. 3. Petitioner's reply dated 20th November, 2014 is Annexure-5 to this petition. Following explanations were furnished:- (i) that petitioner had deposited the outstanding amount of ₹ 1,16,321/-, whereas such sum is erroneously shown to be outstanding; (ii) that petitioner claimed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit entertainment tax. Since such amount had already been realized from the franchise local cable operator, accordingly, after adjusting the amount already deposited, a sum of ₹ 1,52,13,055/- was assessed as the amount payable towards entertainment tax. 5. Aggrieved by the aforesaid order, petitioner preferred an appeal under Section 12(2) of the Act of 1979, reiterating its stand taken in the reply before the assessing authority. The appellate authority relying upon the second proviso to Section 3 held the petitioner liable to payment of tax and dismissed the appeal. So far as rate of subscription charges is concerned, however, no finding has been returned in appeal. Aggrieved by the two orders, petitioner has filed the present writ petition. 6. It is contended on behalf of petitioner that under the Act, tax is payable on admission to entertainment. It is submitted that in respect of subscribers, who are provided entertainment through local cable operators, the liability to collect tax and deposit it is with them, and not the multi system operator. As per the petitioner, its liability to collect and deposit tax is confined to the connection provided to the end subscrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... television network' means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment, designated to provide cable service for reception by multiple subscribers;] XXXXX XXXXX XXXXX (g) 'entertainment' includes any exhibition, performance, amusement, game, sport or race (including horse race) to which persons are admitted for payment and in the case of cinematography exhibitions, includes exhibition of news-reels, documentaries, cartoons, advertisement shorts or slides, whether before or during the exhibition of a feature film or separately. [It also includes any activity notified as entertainment by the State Government from time to time;] XXXXX XXXXX XXXXX [(k-1) 'Multi System Operator' means a cable operator who receives a programming service from a broadcaster or his authorized agencies and retransmits the same or transmits his own programming service for simultaneous reception either by multiple subscribers directly or through one or more local cable operators, and included his authorized distribution agencies by whatever name called;] XXXXX XXXXX XXXXX ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a co-operative housing society or by the management of any factory, hotel, lodge, bar, permit room, pub or by a person or group of persons for the purchase of any type of antenna or any other apparatus for securing transmission through cable television network, Direct-to-Home service or any other service by whatever name called, for its member or for workers or customers or for himself or themselves, as the case may be shall be deemed to be the payment made under the sub-clause. (viii) Where in any entertainment admission has been allowed on a gross payment, such gross payment shall be deemed to be aggregate payment;] XXXXX XXXXX XXXXX (m) 'Proprietor' in relation to any entertainment includes any person,- (i) connected with the organisation of the entertainment, or (ii) charged with the work of admission to the entertainment, or (iii) responsible for, or for the time being in-charge or the management thereof; or] (iv) any cable operator registered under Section 4 of the Cable Television Network (Regulation) Act, 1995 (Act NO. 7 of 1995) or any person responsible for or for time being in charge of management of providing cable co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh an associate or franchise cable operator or an agent, who in turn collects it from the person making the payment: 10. It is clear that 'entertainment tax' is to be 'levied' and 'paid' on all aggregate payments required for admission to any entertainment. 'Admission to an entertainment' is defined to include admission to any place, in which the entertainment is held or any place wherefrom entertainment is provided by means of the cable television network. 'Cable operator' is also defined as one who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of cable television network, and includes the proprietor of a hotel, who provides cable service in the hotel through his own cable television network. A 'multi system operator' is also distinctly defined as one who receives programming service from a broadcaster or its authorized agencies, and re-transmits the same or transmits its own programming service for simultaneous reception either by multiple subscribers directly or through one or more local cable operators. The second proviso to Section 3 clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Definitions In this Act, unless the context otherwise require,- xxxx xxxx xxxx xxxx (fb) cable operator means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of a cable television network. xxxx xxxx xxxx xxxx (g) cable service means the transmission by cables of programme including re-transmission by cables of any broadcast television signals; (h) cable television network means any system consisting of a set of closed transmission paths and associated signal generation/control and distribution equipment, designed to provide cable service for reception by multiple subscribers; xxxx xxxx xxxx xxxx (ka) multi-system operator (MSO) means any person including an individual, group of persons, public or body corporate, firm or any other organization or body, who or which is engaged in the business of receiving television signals and value added services from a broadcaster or his authorized agencies and distributing the same or transmitting his own programming service including production and transmission of programmes and packages, direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gories of hotels, (3) Where the subscriber is a hotel or a restaurant; the proprietor may, in lieu of payment under sub-section (1), pay a compounded payment to the Government on such conditions and in such manner as may be prescribed and at such rate as the Government may, from time to time, notify and different rates of compounded payment may be notified for the different categories of hotels. (4) The proprietor of a video cinema shall be liable to pay entertainment tax at a rate to be notified by the Government from time to time in this behalf. (5) The tax payable under this section shall be paid, collected or realised in such manner as may be prescribed. xxxx xxxx xxxx xxxx 45. Power to make rules (1) The Government may make rules for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide, for- (a) collection of tax and payment thereof in the government account by the proprietor; xxxx xxxx xxxx xxxx Rule 26 of the said Rules: 26. Payment of tax for cable service (1) The proprietor of a cable television network liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment. 13. The Court in Siti Cable Networks Limited (supra) quoted with approval para-41 of the judgment in Bharti Telemedia Ltd. Vs. Government of NCT of Delhi, reported in (2011) 44 VST 262, which had interpreted the relevant provisions. After elaborately discussing the provisions, following principles were culled out in para-40 of the judgment:- 40. ....The tax is on the entertainment and not the manner in which the content of entertainment reaches the actual persons entertained. The tax is not on the content provider or the content transporter or the person entertained - it is on the entertainment. The subscriber may be the person on whom the incidence of the tax falls and the measure of the tax may be based on the subscription money but, as we have already seen, the incidence of a tax or the measure of a tax ought not to be confused with the subject matter of the tax. 14. The judgment of the Apex Court in Purvi Communication (P) Ltd. And others (supra) was distinguished, with reference to West Bengal enactment. Paras-37 and 38 of the judgment in Siti Cable Networks Limited (supra) is also reproduced:- 37. The learned counsel for the respondents had plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Act, a specific liability was created in respect of the 'cable operator' which is not the case with an MSO under the said Act. Therefore, in our view, the decisions both in Purvi Communication (supra) and IndusInd Media (supra) which have reference to the West Bengal act and the Gujarat act, respectively, would be of no help to the respondents where the concepts and definitions under the said Act applicable to Delhi are entirely different. 15. Section 7 of the Delhi Entertainment and Betting Tax Act, 1996, clearly imposes liability of payment of tax upon proprietor of cable television network. Proprietor has been defined as a person charged with work of admission to entertainment. It was in this context that the Division Bench observed that a multi system operator would be liable to pay entertainment tax on admission, only where it offers admission to entertainment directly or through its agent and not otherwise. 16. The statutory scheme in this State is somewhat distinct. The second proviso to Section 3 in the Act of 1979 makes the cable service control room/multi system operator liable to pay tax, irrespective of the fact whether he collects it directly from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stated to have offered admission to entertainment to the end subscriber, and the plea taken in that regard thus need not be entertained. 18. A supplementary affidavit had been filed before the appellate authority, wherein following questions for consideration were formulated. Paras 14 to 17 are reproduced:- 14. That it is pertinent to mention here that till the year 2013 in district Allahabad also the Cable Operators were collecting and depositing the tax on their own there was no role of Multi system Operator in collecting and depositing except in respect to such connections which are provided directly to the subscribers by Multi System Operator, but after 2013 the Entertainment Tax Authorities in District Allahabad have enforced against the provisions of law and the clarification made in administrative order dated 18.9.2002 that tax be deposited by Multi System Operator whereas in the entire State of Uttar Pradesh except the District Allahabad even today Cable Operators are held responsible to collect and deposit entertainment tax. 15. That it is also pertinent to mention here that due to conflicting implementation of provisions of law by the Entertainment Tax Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able connection. The argument raised seems more academic in nature and without any factual foundation laid for it. The second proviso to section 3(1) otherwise makes the proprietor of cable service control room/multi system operator liable to pay tax, whether he collects it directly or indirectly from an associate of franchisees or agent. The statutory obligation imposed upon the multi system operator wold be clearly attracted. 20. A compliance affidavit and supplementary counter affidavit have been filed on behalf of the State annexing affiliation agreement executed between the petitioner and certain cable networks. Clause C, 5 24 of the affiliation agreement are reproduced:- C. For the purpose of its business of providing cable TV service to its subscriber, the Affiliate has been availing and is desirous of continuing to avail cable TV signal feed from the Company and the Company has agreed to continue to provide cable TV signal feed to the Affiliate on the below mentioned terms and conditions. 5. The subscription charges payable by the Affiliate to the Company, per subscriber, for the Company providing cable TV signal feed to the Affiliate shall be ₹ 1500/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors. In the absence of details furnished in that regard. I am not inclined to enter into any dispute with regard to respective liability of a multi system operator viz-a-viz local cable operator in the facts of the present case. 22. In view of such discussions, it is held that by virtue of second proviso to section 3(1) of the Act of 1979, the liability to pay entertainment tax in respect of admission to entertainment offered through a multi system operator would be upon the proprietor of the cable service control room/multi system operator and it is immaterial whether he collects it directly from subscriber or indirectly through an associate or franchisee cable operator or an agent, who collects it from the person making the payment. In the absence of factual foundation laid, showing the particulars of the cable operator or that such cable operator was not an associate/franchise or agent, the liability to pay tax cannot be resisted by the petitioner under the Act. The Act of 1979 has been enacted by the state legislature invoking its authority under Entry 62 of list 2, and the IInd proviso to Section 3(I), which makes the proprietor of multi system operator liable to pay tax, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of the said 1982 Act are engaged in the business of providing or offering entertainments which include showing of films, various serials, cricket matches and dramatic performances to the subscribers, and the tax is imposed on the act of offering such entertainments in this way to such subscribers and/or viewers. The entire communication network service is built up and controlled by the respondents. Whatever amount is received or receivable by the respondent in respect of providing such entertainments is taxable under sub-section (4-a) of Section 4-A of the said 1982 Act which has a direct and sufficient nexus with the entertainments. 40. The charging section is very clear and unambiguous inasmuch as there is no vagueness about the incidence of tax and the person who is liable to pay tax. So far as the declaration of liability to pay tax is concerned, the charging section does not suffer from any vagueness. The provision does not lead to any discrimination amongst persons. There is no scope of any discrimination inasmuch as either an owner, or person who having in his possession electrical, electronic or mechanical device receives signals and instantly transmits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax on the entertainment that has resulted from this exhibition. This provision, therefore, does not cross the bounds of Entry 62 of List II of the Seventh Schedule to the Constitution and is intra vires. Providing a cable link up to the viewers' end is the only role of sub-cable operator. It is, therefore, inconceivable that despite putting forth the ready entertainment in the form of signal on the cable line, the cable operator cannot be said to be providing the entertainment within the meaning of Entry 62 of List II of the Seventh Schedule of the Constitution. So long as the State Act remains within the ambit of Entry 62 of List II and is not offending the provisions of Article 286 of the Constitution or the laws made thereunder, the State Act's validity is beyond question. Thus, Respondent 1 who is engaged in receiving and providing TV signals to individual cable operators is liable to pay tax under clause (ii) of sub-section (4-a) of Section 4-A of the Act. From the definition of communication network given in the agreement between the cable operator and sub-cable operator (termed as franchisee in the agreement), it will be clear that the service rendered by Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclude that these provisions imply that the exhibition is being held here also by the cable operator, only the technical link of the cable service has been provided by the sub-cable operator. The cable operator is also the exhibitor in this case; he is the provider of the entertainment to the customer. Hence he can be asked to pay tax on the entertainment that has resulted from this exhibition. The provision, therefore, does not cross the bounds of Entry 62 of List II of the Seventh Schedule of the Constitution and is intra vires. 52. The arguments advanced by learned Senior Counsel for the respondents with reference to Entry 31 of List I is misplaced since the impugned legislation cannot by any stretch of imagination be said to be one in pith and substance relating to broadcasting. If, levy of tax upon the sub-cable operator treating him as provider of entertainment admittedly falls under Entry 62 making cable operator liable it can by no means take it out of the purview of Entry 62. 53. Accordingly, we find merit and substance in the arguments advanced by learned Senior Counsel for the appellant assisted by Mr Tara Chand Sharma. We find no substance in the contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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